Through Compliance

Basic Concept for Compliance

The CITIZEN Group has been a participant in the United Nations Global Compact since April 2005, and in addition to endorsing the ten principles in four areas and continuing efforts to realize them, we have also established our corporate philosophy of "Loved by Citizens, Working for Citizens,” with The CITIZEN Group Code of Conduct as specific action guidelines for this philosophy, and we always consider what we should do as a good corporate citizen.

Article 3 of The CITIZEN Group Code of Conduct calls for the Group to "engage in business practices that are fair, transparent, open to competition, and responsible." Through these and other means, we strive to act not only in compliance with laws and regulations but also in line with a high level of ethics overall. In addition, as our businesses are growing increasingly complex from day to day amid growing globalization, in April 2020, we formulated The CITIZEN Group Anti-Corruption Policy, which systematically describes the Group's thinking and position toward the elimination of corruption in its various forms, including improper acts and bribery. Based on these policies, we strive to build sound relationships of trust with customers, suppliers, and other stakeholders, with each and every employee in the Group maintaining a high level of compliance consciousness.

The CITIZEN Group Anti-Corruption Policy (Established: April 1, 2020)


Since its establishment, The CITIZEN Group has been seeking to contribute widely to the lives of people around the world through its business activities under the corporate philosophy of “Loved by Citizens, Working for Citizens”. The CITIZEN Group recognizes that corruption in all its forms, including extortion and bribery, is one of the key issues that significantly undermine corporate trust. We will clarify our attitude that we will not allow any such misconduct in the pursuit of profits and will actively work to prevent corruption, including giving or receiving any gift or entertainment that may cause social suspicion or distrust, and will build a sound relationship with our stakeholders. We also seek understanding and cooperation for similar initiatives throughout the supply chain.

  1. We will comply with the international anti-corruption rules and laws and the regulations relating thereto in the countries and regions where we do business.
  2. We will not give or receive gifts or entertainment for the purpose of acquiring or maintaining unfair profits or preferential treatment. Also, we will not give or receive gifts or entertainment in a manner that deviates from normal business practices or social common sense. We will continue to review our business practices to ensure economic rationality, consumer interests, transparency, and fairness.
  3. Based on fair, transparent, and free competition, we will maintain clean and healthy relationships with government agencies, for example, by prohibiting facilitation payments.
  4. We will not approach antisocial forces and will not be involved in such crimes as money laundering.
  5. In order to prevent the violation of laws and regulations, to detect such violations early on, and to reinforce our self-cleaning actions, we will establish an internal reporting system that allows anonymous reporting to both internal and external organizations.
  6. By working to understand social trends related to anti-corruption and by implementing anti-corruption education, we will continuously improve our anti-corruption efforts as needed, including training officers and employees on this policy and the relevant internal rules.
  7. In the event that an unexpected situation arises in relation to the prevention of corruption, we will promptly investigate the cause, take appropriate action to prevent recurrence, disclose information to the public, and fulfill accountability.
  8. We will conduct audits to ensure that the anti-corruption system based on this policy is functioning properly, that necessary training is provided, that appropriate responses can be made to unforeseen circumstances, and that accountability and other actions are satisfied through information disclosure. Audit results will be periodically reported to the Board of Directors. This policy shall be reviewed periodically and approved by the Board of Directors.

Compliance Training and Internal Auditing

Employee Training

To ensure that all members of The CITIZEN Group have a shared understanding of compliance, we conduct periodic training, education, and auditing concerning certain subjects, such as The CITIZEN Group Code of Conduct and The CITIZEN Group Quality Code of Conduct, as we strive to raise awareness of quality compliance across the Group.

FY2022 Training Results

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Training Content Participants (subjects)
Compliance training Training on the Code of Conduct, Anti-Corruption Policy, Human Rights Policy, etc. 6,176 persons

Anti-Corruption Initiatives

The CITIZEN Group's Anti-Corruption Initiatives

In addition to establishing The CITIZEN Group Anti-Corruption Policy, which prohibits acts of corruption, including bribery, The CITIZEN Group also has established internal rules on anti-corruption and is informing all employees of the content of this policy and these rules through e-learning. We also conducted compliance training for Group officers.

The CITIZEN Group strives to realize “business practices that are fair, transparent, open to competition, and responsible” through ascertaining social trends and the conditions inside the Group and revising the related initiatives as necessary.

Anti-Corruption Initiatives in the Supply Chain

The CITIZEN Group Anti-Corruption Policy calls for doing business with suppliers who understand and cooperate with The CITIZEN Group's initiatives based on that policy. Specifically, for suppliers in China it holds supplier briefings along with training on the Anti-Corruption Policy, while in other countries it distributes the "Requests for Suppliers," which include requests based on the Anti-Corruption Policy.

Beginning in FY2021, suppliers will be asked to confirm and consent to CITIZEN's rules and policies, such as the Group Code of Conduct, Group Human Rights Policy, and Group Basic Policy on Health and Safety – including the Group Anti-Corruption Policy – when concluding new contracts and renewing existing ones. Thus, we are working to ensure that all employees are aware of the prevention of corrupt practices.

In addition, CITIZEN WATCH conducts ongoing internal audits of sales quality once a year for each department. Based on a checklist prepared by the Audit Office, each department conducts self-checks, and spot checks are also conducted to help make improvements.

The Compliance Hotline, an Internal Whistleblowing System

To comply with laws and regulations and to prevent, quickly identify, and eliminate improper acts,*1 including bribery and corruption, The CITIZEN Group has established internal whistleblowing systems, incorporating the Speak Up system, to enable any Group employees to submit reports, request consultation, and make suggestions anonymously to CITIZEN WATCH, other Group companies, and external agencies.

Furthermore, we have established the new Group Compliance Hotline Rules in reference to the internal whistleblowing guidelines established by the Consumer Affairs Agency and to the Corporate Governance Code covering matters such as the protection of user confidentiality and the prohibition of disadvantageous treatment. We have also formed guidelines for users and management staff as part of continual efforts to make the system easier to use through the standardization of the responses of those receiving calls. This system is also compatible with the revised Whistleblower Protection Act that came into effect on June 1, 2020. In addition, to enhance the effectiveness of the system, it is essential that whistleblowers are informed of the protection of whistleblowers, including the prohibition of any prejudicial treatment of whistleblowers. 84.0% of employees were aware of the hotline in the FY2022 survey. In FY2023, we will continue to promote awareness of the hotline through training for management staff, feature articles in the company newsletter, and updates to the intranet page.

The number of whistleblowing reports in FY2022 was 23, consisting of 13 received internally, 8 received by external contact points and 2 from auditors *2. As a result of investigations and corrective actions taken on all reports, there were no cases of serious human rights violations or violations of the Anti-Corruption Policy.

In response to the need for teleworking due to COVID-19, we plan efforts to create working environments to enable even more thorough compliance through means such as reflecting opinions received and developing rules concerning the new work style of remote work.

  1. Our approach to the prevention of improper acts is established in Article 3 of The CITIZEN Group Code of Conduct, which calls for the Group to "engage in business practices that are fair, transparent, open to competition, and responsible" (fairness, transparency, openness to competition, responding to government agencies etc., export/import controls, prohibition of contact with antisocial forces, prevention of money laundering, responsible and sustainable procurement).
  2. Includes 4 cases of duplicate reporting to multiple contact points

Intellectual Property Strategy

The CITIZEN Group respects the intellectual property rights of others and strives to avoid infringement. Therefore, from the product planning stage through to sales, we constantly check for the infringement of intellectual property rights and promptly implement measures to prevent infringement if the applicable intellectual property rights of others are found to have been violated.

Moreover, we acquire intellectual property rights for our proprietary core technologies and peripheral technologies and work to establish barriers to prevent competitors from gaining access to these innovations. We simultaneously secure a competitive advantage for our business by implementing decisive countermeasures in response to any third-party efforts to infringe on intellectual property rights.

The CITIZEN Group, in line with the intent of the intellectual property rights system, continues to promote appropriate and effective intellectual property activities that support the Company's sustainable growth.

Security Trade Controls

The CITIZEN Group has established the “The CITIZEN Group Rules for Security Trade Control” to provide reliable and secure trade management within the Group. We have also established the “The CITIZEN Group Security Trade Control Committee,” comprising CITIZEN WATCH and operating subsidiaries. This committee provides guidance, education, and information to Group companies and carries out audits.

CITIZEN MACHINERY takes measures to prevent the improper export of industrial machineries and their improper resale or re-export overseas in order to ensure compliance with the “Foreign Exchange and Foreign Trade Control Law.” We have continued to reinforce export controls by preventing the improper use of industrial machineries with measures such as the installation of relocation detection functions as a standard feature on all products to render equipment inoperable in the event of unauthorized relocation. Thus, even after export, we strive to control the users and uses of the machinery to ensure that it is not used for the development of weapons of mass destruction, etc. through resale or re-export.

Information Security

In recent years, there has been an increasing number of cases of cyberattacks that have a devastating impact on the entire supply chain, such as the shutdown of all domestic bases. The CITIZEN Group recognizes the risks related to information security, such as information leaks and system downtime, as important risks and has strengthened its structure by establishing the Group Information Governance Committee in 2016, chaired by the director in charge of general affairs, to address personal information protection, trade secret management, and information security management.
Specifically, we are working to disseminate The CITIZEN Group Information Security Policy, which was revised in November 2020, throughout the company, and are also working closely with our overseas offices to promote the understanding of the importance of information security. We are also constantly alerting our employees to ransomware and phishing e-mail scams, and we are working to foster information security awareness throughout the Group, for example, by conducting targeted attack e-mail training twice a year in FY2022.

We are building a system to implement security measures in cooperation with the information system departments of our main overseas bases and the head office department to maintain the IT environment for CITIZEN WATCH's global operations.

We actively use data centers and cloud services to build a safe and stable IT infrastructure that is resistant to accidents and disasters to protect the information system environment. The initiatives we have in place also contribute to power savings and CO2 emissions reduction.

“CITIZEN-SIRT” Initiatives

The CITIZEN-SIRT, which was established in June 2020, monitors risks, such as system downtime that deviates from the usual time, and incident occurrence to safeguard against major incidents, such as cyber-attacks. It responds promptly to any suspected incidence, from the initial response to cooperation with the relevant departments and problem resolution.

In FY2022, CITIZEN-SIRT took the lead in conducting desk training to promote quick response to incidents. Scenarios were created with the cooperation of security vendors, and confirmation work was conducted on how to respond to the detection of potential issues. In FY2023, we plan to conduct training at Group companies and review the Group's overall security environment, including formulating a business continuity plan and response guidelines in preparation for incidents.

In addition, based on minor incidents that did not lead to information leaks or system downtime that occurred in FY2021, we introduced a network monitoring system (EDR) to CITIZEN WATCH's system environment in FY2022 to prevent cyber-attacks and strengthen network security. The installation of EDRs at all 34 CITIZEN WATCH sites is scheduled to be completed by the end of FY2023. In FY2022, no incidents arose that required a response from CITIZEN-SIRT.


Protection of Personal Information

The CITIZEN Group recognizes its important responsibility to protect the personal information provided by customers, suppliers, and other stakeholders in its business activities. With the Group Information Governance Committee playing a central role, we strive to protect personal information based on The CITIZEN Group Information Security Policy and The CITIZEN Group Privacy Policy. The specifics of The CITIZEN Group Privacy Policy are as follows.

The CITIZEN Group Privacy Policy

Continued Acquisition of PrivacyMark

TOKYO BIJUTSU, a publisher of art and other books, acquired the right to use the PrivacyMark* in 2007 with a view to protecting personal information and raising the confidence level of clients. We renewed the PrivacyMark certification in March 2022 for the eighth time. Education concerning the protection of personal information is periodically conducted for all employees, including part-timers, and the results of tests used to confirm the effects of the training indicate that a strong awareness concerning the protection of personal information has spread among the workforce. We are committed to bolstering information security, including the handling of confidential information in FY2022.

  • * PrivacyMark: The PrivacyMark System assesses private enterprises that maintain systems for the appropriate handling of personal information, and grants the use of the PrivacyMark to those that meet certain standards.

Handling Anti-Social Forces

The CITIZEN Group recognizes that connections to anti-social forces significantly impair social credibility in the Group and have a grave impact on its survival.
Therefore, our fundamental policy is to take a firm stand against demands for unjust favors or the like from anti-social forces and organizations, and without exception to refrain from any relationships with anti-social forces.

In addition, we maintain and reinforce systems that block relations with anti-social forces through actions such as promoting the adoption of an article regarding the exclusion of organized crime groups in the various contracts into which Group companies enter. Furthermore, we, on a regular basis, partner with external organizations such as the police and regional companies to promote activities to eradicate anti-social forces.

Training Sessions on the Act against Delay in Payment of Subcontract Proceeds Etc. to Subcontractors

In order to ensure appropriate subcontracting transactions and prevent violations of the Act against Delay in Payment of Subcontract Proceeds Etc. to Subcontractors, The CITIZEN Group provides on-the-job training in the workplace as well as guidebooks and e-learning programs to systematically learn about the basics of the Act.

We also hold interactive seminars on the Act against Delay in Payment of Subcontract Proceeds Etc. to Subcontractors. In these seminars, participants use case studies of potential violations in the workplace as teaching materials, express their own ideas, and learn from each other using the case method (a training method in which actual cases are used as teaching materials to discuss best practices and solutions appropriate to any situation).
The violations that are used as case study materials include bartering (unreasonable cost reduction), unreasonable requests for economic benefits (free storage of molds), unreasonable changes or redoing of benefits, and unreasonable returns. Through these simulated experiences, we can discuss areas for improvement in the workplace.

The CITIZEN Group's business is supported by many business partners at every stage of the value chain. In order to truly build a win-win relationship for both the client and the recipient, we are working to improve our business methods to make them more desirable.

CITIZEN WATCH also endorses the "Partnership Building Declaration" promoted by the Ministry of Economy, Trade and Industry. It is committed to building new partnerships for collaboration, co-existence and co-prosperity with business partners in the supply chain and other value-creating businesses.

Tax Compliance

Basic Concept for Tax Compliance

The CITIZEN Group recognizes that paying appropriate taxes is an obligation that allows the Company to make an important social contribution in accordance with its corporate philosophy of "Loved by citizens, working for citizens.” We fulfill our corporate social responsibility by paying appropriate taxes and increasing tax transparency through appropriate disclosure. In FY2023, we will ensure tax compliance by familiarizing all CITIZEN WATCH employees with the proper tax practices through e-learning, etc.

The CITIZEN Group Tax Policy (Enacted: April 1, 2023)

Based on our corporate philosophy of "Loved by citizens, working for citizens.”, The CITIZEN Group believes that paying appropriate taxes is not only a duty, but also an important social contribution. Based on this belief, The CITIZEN Group hereby establishes The CITIZEN Group Tax Policy as the Group's unified basic policy on taxation.

  1. Compliance with Laws and Regulations

    The CITIZEN Group shall comply with the tax laws and regulations of the countries and regions in which it operates, respect the OECD Guidelines and other international tax rules, and file tax returns and pay taxes in an appropriate and timely manner.

  2. Tax Governance

    Under the supervision of the director in charge of the Accounting Department, CITIZEN WATCH Co., Ltd. confirms tax information of its subsidiaries as the parent company and strive for centralized management of tax risks by the parent company. If tax risks become apparent during tax audits, etc., at subsidiaries, we gather detailed information and take appropriate action.

  3. Tax Planning

    The CITIZEN Group makes effective use of tax incentives, etc. in each country and region where they are available during normal business activities and strive to achieve an optimal tax burden. We do not engage in excessive tax planning or use tax havens for the purpose of tax avoidance, contrary to the intention of laws and regulations.

  4. Transfer Pricing Taxation

    The CITIZEN Group strives to distribute profits appropriately according to functions and risks based on the concept of arm's length pricing for international transactions between group companies. We also strive to prepare appropriate transfer pricing documentation in accordance with the transfer pricing taxation systems of each country and region.

  5. Tax Risk Management

    The CITIZEN Group thoroughly considers tax risks in business activities in advance, and if necessary, seek advice and guidance from external experts to reduce tax risks. If any questions arise regarding tax treatment or interpretation, etc., we will respond appropriately by seeking advice from outside experts, etc., or making prior inquiries to the tax authorities as necessary.

  6. Relationship with Tax Authorities

    The CITIZEN Group strives to maintain appropriate relationships with tax authorities through honest responses and fact-based explanations.